So as you all get back into work mode, here's your Monday
Scouting Report:

Top Stories

The Fed remains in focus. On Wednesday, the
Federal Reserve will release the minutes of its
December 15 to 16 Federal Open Market Committee Meeting,
which is when the Fed hiked rates and ended seven uninterrupted
years of near-zero interest-rate policy. From Credit Suisse:
"Investors will be interested in the minutes not so much to
explain the past but to anticipate the future. The December 16
policy statement noted that the FOMC expects 'only gradual
increases in the federal funds rate.' Yet the Committee's
dot plot suggests that most participants' conception of an
'appropriate' pace of tightening is still much more aggressive
than what the markets conceive of as the most likely pace.
Also, the discussion behind the mid-December decision to make
the
Fed's overnight reverse RP operations full-allotment, while
maintaining individual counterparty caps, could also enhance
the markets' understanding of how the Fed staff and
policymakers envision the evolution of this facility."

On Sunday, Fed Vice Chair
Stanley Fischer expressed his encouragement that monetary
policy tools seem to be working after the rate hike
announcement. One statement he made that caught a lot of
attention was his remark about asset values. From
his prepared remarks: "[I]f asset prices across the economy
— that is, taking all financial markets into account — are
thought to be excessively high, raising the interest rate may
be the appropriate step. Further discussion of this issue
will probably bear considerable similarity to the analysis of
how to deal with asset bubbles that took place in the United
States in the decade starting about two decades ago."

NYPD Officer Nydia
Rodriguez takes a selfie with members of the US Marine Corps and
US Navy during New Year's celebrations in Times
Square.REUTERS/Darren
Ornitz

Economic Calendar

Markit US
Manufacturing PMI (Mon.): Economists estimate this
manufacturing index fell to 51.1 in December from 52.8 in
November. Here's
Markit's Chris Williamson: "Although manufacturing only
accounts for around one-tenth of the economy, the Manufacturing
PMI exhibits a high correlation of 77% with GDP as industrial
activity has an important cyclical impact on other parts of the
economy. With many sectors such as transport and business
services dependent upon the manufacturing economy's health, the
downturn in the survey data sends a warning signal that the US
upturn appears to be rapidly losing momentum as we move into
2016."

ISM Manufacturing
(Mon.): Economists estimate this manufacturing index
climbed to 49.0 in December from 48.6 in November. Here's BNP
Paribas: "Thus far, the average of the regional manufacturing
surveys, on an ISM-adjusted basis, suggests that the
manufacturing sector remains in contraction. We continue to see
headwinds to the manufacturing sector from the oil price shock
and the strong dollar."

Construction Spending
(Mon.): Economists estimate spending climbed by 0.7% in
November. Here's Morgan Stanley's Ted Wieseman: "A strong
rebound in housing starts in November points to a good gain in
home-building activity, and we anticipate the unusually warm
weather will also provide a lift to private nonresidential and
state and local government spending after a big rise in
seasonally adjusted construction jobs in November indicated the
mild weather delayed seasonal layoffs. A correction in the
smaller federal government category after a 19% spike in
October will probably detract somewhat from stronger underlying
activity, however."

Auto Sales
(Tues.): Analysts estimate the pace of auto sales
slipped to an annualized rate of 18.0 million
units. Here’s Wells Fargo's Sam Bullard: "Since bottoming
in February 2009 at an annualized 9.04-million unit pace, total
motor vehicle sales have consistently increased over the past 7
years, currently standing at a near post-recession high of
18.05-million units. Solid demand, attractive financing,
increased incentives and lower gasoline prices have combined to
help make 2015 the strongest sales year on record. For
December, we project motor vehicle sales will slip 0.6% to a
17.94-million unit pace. If our forecast is realized, motor
vehicle sales would have increased 17.39 million units in 2015,
a 5.8% increase over 2014's sales pace."

ADP Employment Change
(Wed.): Economists estimate US companies added 194,000
private payrolls in December. Here's Bank of America
Merrill Lynch: "We expect job gains to be driven once again by
the services side of the economy, though goods sector hiring
should be buoyed by a healthy construction market. In the last
six months, ADP private payroll gains have generally outpaced
BLS payrolls and our ADP and BLS forecasts assume a
continuation of that trend."

Trade Balance
(Wed.): Economists estimate the trade deficit widened to
$44.00 billion in November from $43.89 billion in
October. Here's Barclays: "We expect the trade balance to
narrow modestly, consistent with the advanced November trade
release for goods, PCE data from the BEA, port traffic data,
and price data for exports and imports. In part, the narrowing
of the trade balance owes to a decline in nominal imports,
which in turn owes in large part to rapidly falling import
prices."

Markit US Services
PMI (Wed.): Economists estimate this services index fell
to 55.4 in December from 56.1 in November. Here's
Markit's Chris Williamson: "Hiring remained encouragingly
resilient in the face of the weaker growth trend, pointing to a
non-farm payroll increase of 170,000. That's below the average
of 201,000 signaled in the preceding 11 months of the year (and
below the official year-to date average of 210,000), but still
strong."

ISM Services
(Wed.): Economists estimate that this services index
improved to 56.0 in December from 55.9 in October. Here's BNP
Paribas: "We expect optimism in the services sector to show
resilience, in line with the pace of job gains in the sector.
Solid consumer sentiment also lends itself to continued
strength in the non-manufacturing sector."

Factory Orders
(Wed.): Economists estimate orders fell by 0.2% in
November. Here's Barclays: "The advance report on durable
goods revealed that the slump in nondefense aircraft orders was
offset by a surge in orders for defense aircraft and motor
vehicles. As a result, the durable half of total factory demand
was unchanged on the month."

FOMC Minutes
(Wed.): The Federal Reserve will release the minutes of
its December 15 to 16 Federal Open Market Committee meeting at
2 p.m. ET.

Initial Jobless
Claims (Thurs.): Economists estimate that initial claims
climbed to 273,000 from 267,000 a week ago. Here's Bank of
America Merrill Lynch: "Given Christmas was the prior week and
New Year's Day was this week, do not be surprised to see some
seasonal volatility in the data, even after the adjustment
process. As a result, we recommend looking through any jumps in
the series and focusing on the 4-week trend, which should
remain at a low, healthy level."

The Jobs Report
(Fri.): Economists estimate that US companies added
200,000 nonfarm payrolls in December, driven by a 192,000 gain
in private payrolls. The unemployment rate is expected to be
flat at 5%. Average hourly earnings are expected to have
increased 0.2% month-over-month or 2.8% year-over-year. Here's
Wells Fargo's Bullard: "Strong nonfarm payroll gains in October
and November helped allay concerns regarding the labor market
following the late summer hiring slowdown. On the back of
favorable secondary employment indicators, including jobless
claims, we project nonfarm payrolls to have increased 195,000
in December. If realized, 2.503-million jobs would have been
added in 2015, down from the 3.12-million jobs added in 2014,
but also marking the strongest two-year payroll gain since
1998-1999. The unemployment rate should break through the 5%
level, edging down to 4.9%. A low year-ago base effect should
result in a spike to the year-over-year pace of average hourly
earnings on the month. Indeed, a trend-like 0.2% monthly gain
will result in the year-over-year pace jumping to 2.8%, the
strongest reading since June 2009. On balance, we expect the
December employment report to continue to show the U.S. labor
market progressing toward full employment."

Consumer Credit
Balances (Fri.): Economists estimate consumer credit
balances increased by $18.25 billion in November. Here's Credit
Suisse: "Nonrevolving credit (mainly auto and student loans)
has been accounting for the bulk of consumer credit gains; we
estimate it rose by some $17.0bn in November after a $15.8bn
rise the previous month. But we are expecting the Federal
Reserve to report a larger incremental monthly increase in
revolving credit (mainly credit card balances). We estimate
revolving credit outstanding rose $4.5bn last month after
October's small $0.2bn gain. Credit card usage always goes up
in not-seasonally-adjusted terms during the holiday shopping
season. We figure it may have increased in adjusted terms, as
well, if shoppers spent a greater proportion of their holiday
gift dollars online this year, in which case cash payments are
not an option (as they are in brick-and-mortar stores)."

Market Commentary

The stock market hasn't even opened yet in 2016, and the pros are
already rethinking their year-end targets.

RBC's Jonathan Golub has told clients that his initial year end
target for the S&P 500 was a bit too bullish.

"On November 20, we published our 2016 outlook with an S&P
500 price target of 2,300," said Golub, RBC's chief equity
strategist. "Since that time, WTI
has fallen by nearly 10% and bottom-up analyst estimates
for 2016 have fallen by 1%. Further, economic trends have
softened, with the November
ISM at 48.6, well below the 53.7 average of the past 3
years."